BackTexmaco Rail to launch open offer to buy 30% in Kalindee Rail
Bid comes on the back of Jupiter Metal’s hostile takeover bid for Kalindee Rail
Premium(On 13 July, Kalindee Rail decided to issue 24.90% of equity through preferential allotment of shares to Texmaco Rail at `63.13 a share to avert Jupiter Metal’s plans to acquire a 30% stake.)
Mumbai: Kolkata-based rail wagon maker Texmaco Rail and Engineering Ltd, on Saturday, said it has decided to launch an open offer to buy a 30% stake in Gurgaon-based Kalindee Rail Nirman (Engineers) Ltd after buying out entire promoters’ stake of 11.74% in the firm.
In a filing to Bombay Stock Exchange (BSE), Texmaco Rail said that merchant banker ICICI Securities Ltd, on behalf of the company, has decided to buy 4.95 million shares of Kalindee Rail via open offer at an offer price of ₹ 68 a share.
This open offer is also in response to Jaipur-based engineering and construction company Jupiter Metal Pvt. Ltd’s attempt of a hostile takeover, by launching a conditional and voluntary open offer, to acquire up to 30% in Kalindee Rail.
On 10 July, merchant banker Ashika Capital Ltd said it was launching a conditional open offer on behalf of Jupiter Metal at an offer price ₹ 65 a share. Texmaco Rail currently owns 36.64% stake in Kalindee Rail and is looking to acquire more via the open offer.
On 13 July, Kalindee Rail decided to issue 24.90% of equity through preferential allotment of shares to Texmaco Rail at ₹ 63.13 a share to avert Jupiter Metal’s plans to acquire a 30% stake.
“We were waiting for the counter offer from Texmaco Rail. Now, we will enhance our offer. We are yet to write to capital market regular about violations by Kalindee Rail in issuing preferential allotment to Texmaco," Vikas Kothari, executive director of Jupiter Metal, told Mint on Saturday.
Texmaco Rail’s open offer was triggered as the company bought out promoters’ entire stake of 11.74% for ₹ 65 a share.
“The promoters of Kalindee Rail, including R.D. Sharma and others, are already out of the company. Though Jupiter Metal may raise the open offer price, I don’t expect intense competition for Kalindee Rail," said an investment banker, requesting anonymity.
On 15 July, Mint had reported that Jupiter Metal’s attempt of a hostile takeover may lead to litigation and a counter offer.
Jupiter Metal is exploring legal options including writing to capital market regulator Securities and Exchange Board of India (Sebi) against Kalindee Rail for deciding to issue equity of just less than 25% to another company amid an open offer launched by the Jaipur firm, Kothari said. This, he said, was a violation of capital market regulations.
Jupiter Metal is promoted by D.P. Kothari and Texmaco Rail is promoted by Saroj Poddar-led Adventz Group. Kalindee Rail is promoted by R.D. Sharma, who is also the chairman and managing director of the company.
Niraj Kothari, who is managing the open offer for Jupiter Metals at Ashika Capital, was not available for an immediate comments for the story.
A company can launch a voluntary open offer without holding any shares in a particular target company, an investment banker said, requesting anonymity. As per India’s takeover guidelines, if a company acquires a 25% stake in a listed company, it must launch an open offer for buying at least another 26% stake from the company’s public stakeholders.
“Buying additional 26% after purchasing 25% stake in a company is compulsory. But guidelines allow a company to launch an open offer without holding any shares via voluntary open offer. In this case, Jupiter Metals has a clear intention to control the management and take over the company. Hence, Jupiter has expressed its intention to go up to 30% instead of 26%," the banker said.
The banker added that now Jupiter Metal will have to come out with an enhanced open offer on the expanded equity base of Kalindee Rail post preferential allotment.
From 3 July, shares of Kalindee Rail have risen 19.95% since the rumours of Jupiter Metal surfaced in the market. From 15 July, the shares of Texmaco Rail rose 2.69% since the preferential allotment was made to the company by Kalindee Rail.
On Friday, the shares of Kalindee Rail ended at ₹ 70.65 a share on BSE, down 1.33% from previous close while the benchmark Sensex rose 0.11% to close at 20,149.85 points. The shares of Texmaco Rail ended at ₹ 36 a piece on BSE, unchanged from previous close.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
